POLITICAL STABILITY AND ITS IMPACT ON ECONOMIC GROWTH OF ASIAN COUNTRIES. A COMPARISONS BETWEEN STRONG AND WEEK POLITICAL STABLE COUNTRIES (1988-2018).

Abstract

Political economy is dealing with economic growth theories since last two hundred years despite this somehow attention was given on empirical verification. In this connection the research pays attention on empirical analysis. The Research analysis the effect of political stability (PS) on economic growth (EG) in Asian countries. Researchers has differentiate the effect of PS on EG for strong and weak political stable countries separately. The nexus between PS and EG is one of the central point of discussion among researchers in the field of political economy. To investigate whether the variables are stationary or not we have been conduct panel unit root tests. There are some approaches that analyses unit roots such as PP - Fisher Chi-square, Im, Pesaran and Shin ,W-stat, Levin, Lin & Chu Breitung t-stat and ADF - Fisher Chi-square for the benefit of variables. In this research Im, Pesaran and Shin,W-stat Panel unit root test has been used for checking the stationary of the data. The results shows that PS and INF are become stationary at level I (0), while GDP, GFCF and TLF are become stationary at 1st difference I (1). In the research Panel ARDL (PMG) method has been used for checking short run and long run nexus between dependent variable (DV) and explanatory variable.

PS has positive impact on EG of strong political stable countries and for weak political stable countries, there is negative effect of PS on EG in the long run analysis. In the short run there is an in No Effect of PS on the EG of strong political stable countries and for weak political stable countries, there is positive effect of the PS on the EG. GFCF has positive effect on the EG of strong and weak political stable countries in the long and short run analysis. TLF has also positive impact on the EG of strong and weak political stable countries in the long run analysis. While in the short run there is insignificant effect (No Effect) of TLF on the EG. In the long run INF has negative effect on the economic growth of strong and weak political stable countries. In the short run INF has a positive effect on the economic growth of strong political stable countries. While for weak political stable countries, there is insignificant effect of the inflation on the economic growth.